quinta-feira, 12 de maio de 2016
What China’s checkbook diplomacy means for Europe
What China’s checkbook diplomacy means for Europe
The Asian superpower is poised to divide and rule Europe.
By PHILIPPE LE CORRE 5/12/16, 5:35 AM CET
While much has been made of Europe’s deepened state of crisis and the Obama government’s turn away from the United States’ historic ally, one country is investing more, not less, in the Old Continent: China.
Chinese President Xi Jinping’s March 2016 Czech Republic visit was a perfect display of the country’s strategic decision to cozy up to Europe. The feeling, it turns out, is mutual.
China chose Prague for its first bilateral summit with an East European country in 20 years, when the Czech government expressed goodwill toward “One Belt, One Road,” a centerpiece of China’s foreign policy focused on building infrastructure networks. With new €4 billion agreements, China became the Czech Republic’s largest trading partner outside the EU.
And the Czech Republic is far from the only European country eager to do business with China. Hungary, Slovakia, Poland, Romania and Bulgaria have all declared themselves willing to develop stronger economic ties.
In late 2015, Serbia and Hungary engaged in separate deals with government-backed Chinese investors for a 350 kilometer Budapest-Belgrade high-speed railway project. Serbia — cash-strapped, largely deindustrialized and in need of investment in infrastructure — has welcomed Chinese external funds to make up for what a commentator calls “local and EU capital shortages.”
Next month, it will be Belgrade’s turn to host Xi. In Eastern Europe, Chinese investment, it seems, may be a faster way to get at much-needed cash.
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China’s checkbook diplomacy is on the rise. In the past, European countries competed for a share of the Chinese consumer market. Now they compete for Chinese capital.
Beijing’s leadership first started encouraging companies to branch out to the West more than 15 years ago. But business with Europe only took off during the 2008 euro debt crisis, when former Chinese Premier Wen Jiabao offered to buy eurobonds and help indebted countries such as Greece and Portugal. The move helped paving the way for major Chinese state-owned investors such as COSCO (China Ocean Shipping Company), the shipping giant now running the Piraeus port in Athens, or grid giant Three Gorges Corp, in the first of a series of sales of state-owned assets under the Portuguese austerity program.
The U.K. now considers itself one of China’s best friends in the West, but the June 23 Brexit referendum is causing concern among Chinese investors.
While China’s relations with the United States and some of its Asia-Pacific allies (Japan in particular) became tense, Europe didn’t seem to care very much about strategic issues like the South China Sea or cybersecurity.
In fact, individual European countries were openly “cash hungry” — which suited China, with its $3.5 trillion in foreign reserves and powerful sovereign fund.
So, what is in it for China? Put simply, China needs Europe. Western public opinion still generally mistrusts the Beijing regime. Part of the reason China so desperately wants to develop European partnerships is to rectify this image. This is particularly true in Germany, China’s most important European economic partner, and the U.K., the EU’s top recipient of Chinese foreign direct investments.
Their strategy seems to be working. According to Pew Research Center, in 2015, 34 percent of Germans had a positive opinion of China, compared to 28 per cent in 2014. In the U.K., the favorability rate rose to 45 percent.
Xi’s state visit to the U.K. last October checked off all of the Chinese leadership’s favorite boxes: Xi joined the Queen for a ride in the royal carriage, stayed at Buckingham Palace, addressed both houses of Parliament, and presided over several major business deals.
The U.K. now considers itself one of China’s best friends in the West, but the June 23 Brexit referendum is causing concern among Chinese investors. Their real target is not just the British market, but the European one.
Until now, China’s relationship to the EU had been mainly about trade — China is the EU’s second largest trading partner, after the United States. Now, Beijing and Brussels increasingly use the term “partnership” to define their relationship, and the 2015 EU-China summit in Brussels took up new areas of concern, promising cooperation on security and terrorism.
The Chinese government has also been more vocal about European politics: As the European Commission and the Chinese government signed a joint summit declaration, Premier Li Keqiang publicly expressed a wish that Greece remain in the eurozone. In London, Xi commented that the U.K. was an important member of the EU and “could play a more positive and constructive role in promoting in-depth development of China-EU relations.”
Statements like these are highly unusual for leaders of a regime that officially states it “does not interfere in other countries’ politics.” Beijing has made it clear that it cares a great deal about its relationship with the Europeans, especially as the EU is debating whether or not to grant market economy status to China.
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There is a clear interest for China to invest in European infrastructures, either through acquisitions, equity or as a partner through the €315-billion European Fund for Strategic Investments. China may become the largest non-EU contributor to the “Juncker Plan,” which fits well with Beijing’s own idea of a global infrastructure network. In Europe’ current context and identity crisis, it remains to be seen if the dots can be connected between Brussels and Beijing.
China has already been successful in Greece, where it quickly moved into the infrastructure sector in 2008 and where its investment in Piraeus port ranks as one of the most successful Greek privatizations in recent decades. Using Athens as a logistical base will now open up new possibilities for Chinese companies to send their products by train to Central Europe and the Balkans, as well as countless prospects in the Mediterranean sea.
European leaders need to show the union’s strengths and values when dealing with the former Middle Kingdom.
Meanwhile, life has become much harder for European businesses in China, according to the EU Chamber of Commerce in China, which has published incendiary reports stressing the disequilibrium in market access at the expense of European companies in China, which suffer from “disproportionately restrictive rules.”
Hashing out a new China policy will be a challenging task as Chinese companies and cash-rich government entities spread their influence across Europe. But unless EU member countries can agree on a common policy, the relationship between a weakened Europe and an increasingly assertive China risks becoming increasingly unbalanced.
In the interests of smaller member countries, and of the EU as a whole, European leaders need to show the union’s strengths and values when dealing with the former Middle Kingdom. This is the only way Europeans can achieve a balanced relationship with China.
Philippe Le Corre is a visiting fellow at the Brookings Institution in Washington, D.C., and author of the newly released book “China’s Offensive in Europe” (Brookings Institution Press, 2016).